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Private consumption remained under pressure in August
The economy is exerting pressure on consumer spending. The UBS consumption indicator has weakened once again in August and at 0.66 is clearly below its long-standing average of 1.5. Despite the decline, the indicator continues to hint at a modest expansion in Swiss private consumption.
The monthly UBS consumption indicator fell in August from 0.75 to 0.66. The indicator thus continued the downward trend that began one year ago. The UBS consumption indicator has now registered below its long-term average of 1.50 for eleven months now.
The UBS consumption indicator is calculated based on five sub-indicators: new car sales, business activity in the retail sector, the number of hotel overnight stays by Swiss nationals in Switzerland, the consumer sentiment index, and credit card sales generated via UBS at domestic points of sale. Contributing to the renewed decline in the UBS consumption indicator are in particular the flagging consumer confidence and the continued decline in car sales and hotel overnight stays.
Despite the current economic weakness, the indicator's positive level hints at a modest increase in Swiss private consumption in August. However, the environment remains difficult. The rise in unemployment until the end of the year, both as a result of economic developments and seasonal, may well further dampen consumer spending. UBS therefore expects a further weakening of private consumption in the coming months. After a growth forecast of 0.8% in 2009, UBS is expecting a clearly smaller increase for 2010 of 0.1%.
UBS Consumption Indicator and private consumption in Switzerland
(Private consumption: year-on-year change in %, UBS Consumption Indicator: index level)
Calculation of the UBS Consumption Indicator:
The UBS Consumption Indicator signals private consumption trends in Switzerland with a lead of about three months on the official figures. At 57%, private consumption is by far the most important component of Swiss GDP. UBS calculates this leading indicator from five consumer-related parameters: new car sales, the business situation in the retail trade, the number of overnight hotel stays by Swiss nationals in Switzerland, the consumer sentiment index and credit card transactions made via UBS at points of sale in Switzerland. With the exception of the consumer sentiment index, all of these data are available monthly.
Daniel Kalt, Head Economic & Swiss Research
Tel. +41-44-234 25 60
Christoph Arnold, Economic & Swiss Research
Tel. +41 44 234 44 13
UBS publications and forecasts for Switzerland: www.ubs.com/wmr-swiss-research